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Content last modified 6/05/2009.
March 15, 1974(CONFIDENTIAL FR)
MONETARY AGGREGATESANDMONEY MARKET CONDITIONS
Prepared for the Federal Open Market Committee
By the Staff
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
CONFIDENTIAL (FR)
MONETARY AGGREGATES ANDMONEY MARKET CONDITIONS
Recent developments
(1) Following the decline in January,M1 rose at a 13.4 per
cent annual rate in February and has expanded considerably further in early
March. M1 growth for the February-March target period thus appears to be
well in excess of the Committee's specified range of tolerance. For M2,
however, the expected growth rate for the February-March period remains
within its range of tolerance, as inflows into time deposits other than CD's,
after a large expansion in January, have been somewhat smaller than projected
recently. RPD's are expected to expand at a rate slightly above 6 per cent
over the two-month target period, close to the top of the range of tolerance.
Growth of Monetary Aggregates and RPD'sin February March Target Period
Reserve and Monetary Aggregates Range of Latest
(Growth at SAAR in per cent) Tolerance Estimates
RPD's 3½--6½ 6.1
M1 6½--9½ 11.8
M2 9 ½ --12½ 11.7
Memo:Fed funds rate(per cent per annum)
Avg. for Statementweek ending
8¼--9½ Feb. 20 9.07March 13 9.03
Day ofMarch 14 9.14March 15 9-3/8e
e- Estimate
March 15, 1974
(2) The large February increase in M1 , broadly based by region
and size of bank, occurred mainly during the three weeks ending February 20
and was associated with a very sharp, $4 billion, decline in U.S. Government
deposits. Changes in U.S. Government deposits often show little inverse
correlation with M1 after seasonal adjustment, but the unusually large size
of the change in Government deposits in the first three weeks of February
may have affected the level of private deposit holdings at least temporarily.
Subsequently, however, Government deposits have increased somewhat and M1
has continued to expand.
(3) As shown in the table below, growth in RPD in the current
February-March target period is now expected to be somewhat larger than that
at the time of the previous FOMC meeting (based on the midpoint of the
adopted range of tolerance). The upward revisions in the current estimate
are accounted for by the larger than expected growth in private demand deposits.
The other uses of RPD, in fact, are now estimated to have absorbed somewhat
fewer reserves than earlier estimated.
Comparison of Projected Changes in RPD's by UseFebruary-March 1974
(In millions of dollars)
Projections as ofFebruary 20, 1974 CurrentFOMC meeting Projection
Change in Total RPD's 1/ 277 334
Change in Category of Use:
Private demand deposits 2/ -181 -38
Time deposits other thanlarge CD's 134 143
CD's and nondeposit funds 239 201
Excess 85 281/ Changes from January to March 1974. Column 1 is consistent with mid-
point of Committee's range of tolerance for RPD growth.2/ Due to the weekly distribution of deposits and the lagged reserve require-
ments, the absolute change in RPD's absorbed by required reserves againstdemand deposits is estimated to be negative over the two months fromJanuary to March.
-3-
(4) The Federal funds rate fluctuated around 9 per cent from the
February meeting of the Committee until early March. By early March, the
strong expansion in M1 and RPD would, under normal circumstances, have
triggered a move to more restriction in reserve-supplying operations with
the funds rate moving toward the 9½ per cent top of its range. However, by
that time there already had been a broad-based increase of around 25-50 basis
points in short-term market interest rates and 10-30 basis points in long-
term rates. In addition, financial markets were in a sensitive state with
U.S. Government security dealers and bond underwriters still holding
sizable positions of longer term issues. With these considerations in
mind, on March 1 the Chairman recommended and the Committee concurred
that Federal funds rate be maintained at around the prevailing 9 per cent
level for the time being. On March 11, with the aggregates continuing
strong, the instruction to the Desk was amended by the Committee to restore
the range of tolerance for the funds rate approved at the February meeting.
but with the Manager expected to proceed very cautiously in moving the funds
rate above the 9 per cent level. Most recently, with the aggregates still
strengthening, the Manager has been operating in the expectation that the
funds rate would move up to around the 9½ per cent upper limit.
(5) From the mid-February Committee meeting to date, bill rates
have increased by about 80 basis points, with the 3-month bill rate most
recently at 7.85 per cent. For commercial paper and CD's, rates increased
by 50 to 70 basis points. In the weeks preceding the mid-February meeting,
short-term rates had declined by about a percentage point. The recent
increases--based in part on a change in expectations about monetary policy
-4-
and partly influenced by mid-March tax rate pressures--have retraced most
of that decline. Member bank borrowing at the Federal Reserve has changed
little, averaging $1,050 million over the last three weeks.
(6) Yields in all sectors of the bond market have also been
under upward pressure in recent weeks, as marketings of corporate, municipal,
and U. S. Government issues were large. In the Treasury coupon sector,
intermediate term rates increased by about 40 basis points as U. S. Government
security dealers reduced by $1.3 billion their very large positions acquired
in the mid-February refunding; dealer positions are now of moderate proportions.
The Desk purchased $190 million of coupon issues on March 13. Treasury
borrowing during the period was confined to a $1.5 billion sale of additional
short tax bills in early March. Interest rates on mortgages have declined
only slightly further. A continued large inflow of funds to savings and
loan associations was partly used to build liquidity and to reduce borrowings.
Stock market prices have shown a substantial rebound.
(7) The table on the next page shows (in percentage annual rates
of change) selected monetary and financial flows over various recent time
periods. Appendix Table III compares money supply growth rates computed
on a quarterly-average basis with those computed on a last-month-of-quarter
basis.
Average ofPast 3 Past Past Past
Calendar 12 6 3 PastYears Months Months Months Month1971 Feb. '74 Feb. '74 Feb. '74 Feb. '74
-- over over over over1973. Feb. '73 Aug. '73 Nov. '73 Jan. '74
Total reserves 8.5 8.0 6.5 7.1 -24.6
Nonborrowed reserves 7.6 9.7 13.1 9.8 -30.2
Reserves available tosupport private non-bank deposits 8.8 8.7 4.1 5.4 0.0
Concepts of Money
M1 (currency plusdemand deposits)1/ 6.9 5.7 4.8 5.7 13.4
M2 (M1 plus time depositsat commercial banksother than largeCD's) 10.3 9.0 9.1 9.5 13.4
M3 (2 plus depositsat thrift insti-tutions) 11.7 8.4 8.2 9.0 11.4
Bank Credit
Total member banksdeposits (bank creditproxy adj.) 10.5 9.9 4.9 6.3 0.8
Loans and investmentsof commercial banks 2/ 12.8 11.7 8.2 10.9 15.0
Short-term market paper(Monthly avg. change inbillions)
Large CD's 1.0 1.5 0.1 1.5 1.1
Nonbank commercialpaper 0.1 0.8 1.4 1.3 1.4
1/ Other than interbank and U.S. Government.2/ Based on month-end figures. Includes loans sold to affiliates and branches.
NOTE: All items are based on averages of daily figures, except for data ontotal loans and investments of commercial banks, commercial paper, and thriftinstitutions--which are derived from either end-of-month or last Wednesday-of-month figures. Growth rates for reserve measures in this and subsequent tablesare adjusted to remove the effect of discontinuities from breaks in the serieswhen reserve requirements are changed.
Prospective developments
(8) Three alternatives for Committee consideration are summarized
below (with more detailed figures shown in the table on p. 6a).
Alt. A Alt. B Alt. C
Targets (2nd & 3rd qtrs.combined)
M1 6½ 5¼ 4¼
M2 9½ 7¾ 5¾
Credit proxy 6¼ 5½ 4½
Associated ranges forMarch - April
RPD 5¾--7¾ 5-7 4½ -6½
M1 7--9 6½--8½ 6--8
M2 8½--10½ 7¾--9¾ 7¼--9¼
Federal funds rate range 8½--9½ 9¼--10½ 9¾--11½(inter-meeting period)
(9) Following the recent overshoot in M1 growth, both alternatives
B and C are designed to slow M1 growth and restore it to the 5¾ per cent
growth path adopted at previous meetings. Current estimates for M1 in
relation to the long-run growth path are shown in the chart on the following
page. Alternative B aims at a return of M1 to the path by September, whereas
alternative C moves it back more quickly by June (though it then falls
substantially below the path in the third quarter). Alternative A, which
is judged to be consistent with little change in money market conditions,
includes a growth rate for M1 over the next six months that remains above
the 5¾ per cent growth path.
MONEY SUPPLY AND LONGER RUN TARGET PATH
RATIO SCALE, BILLIONS OF DOLLARS
Week of March 6, 1974
®4, o GROWTH- -. -5 % GROWTH
RATE OF GROWTHDEC. '72 TO DEC. '73 5.7%
I ,....lp
SI I I I I I I IJ A S
-1 280
S-270
J A S O N J F M A M1973 1974
260
Alternative Longer-Run Targets-6a-
for Key Monetary Aggregates
M1
Alt. A Alt. B Alt, C Alt. A Alt. B Alt. C
M.3Alt. A Alt. B
1973 Dec.
1974 Feb.Mar.Aor.
June
Sept.
Quarters:
1974 1st Q.2nd Q.3rd Q.
Months:Mar.Apr.
1973
1974
Dec.
Feb.Mar.Apr.
June
Sept,
Quarters:1974 1st Q.
2nd Q.3rd Q.
Months:Mar.Apr.
270.4 270.4 270.4
272.6274.9276.2
279;4
284.0
6.76.56.6
272.6274.9276.0
278:8
282.3
6.75.75.0
10.1 10.15.7 4.8
Adjusted CreditAlt. A Alt. B
449.6 449.6
454.6 454.6456.5 456.5460.5 460.2
464.8 463.9
470.8 468.5
6.17.35.2
5.010.5
6.16.54.0
5.09.7
272.6274.9275.8
278.3
280,9
6.74.93.7
10.13.9
ProxyAlt, C
449.6
454.6456.5460.0
463.2
466.7
6.15.93.0
5.09.2
570.7
580.1584.9589.2
598.8
612.8
570.7 570.7
580.1584.9588.6
596.6
607.9
Rates of Growth
10.0 10.09.5 8.09.4 7.6
9.98.8
580.1584.8588.1
594.0
601.5
9.96.3.5.1
9.96.8
Total ReservesAlt. A Alt. B Alt. C
35,105 35,105 35,105
35,115 35,115 35,11534,988 34,984 34,98135,313 35,276 35,239
35,406 35,312 35,238
35,930 35,707 35,535
2.14.85.9
-4.411.2
2.03.74.5
-4.510.0
1.92.93.4
-4.68.9
893.2 893.2 893.2
906.8913.8920.4
934.4
955.0
9.29.08.8
9.38.7
Alt, A
32,912
32,79933,13333,164
33,453
34,111
6.33.97.9
12.21.1
806.8913.8919.5
931.1
947.8
9.27.67.2
9.37.5
RPDAlt. B
32,912
32,79933,13033,128
33,362
33,889
6.22.86.3
12.1-0.1
906.8913,6918.5
926.6
937.4
9.15.74.7
9.06.4
Alt. C
32,912
32,79933,12633,091
33,290
33,715
6.12.05.1
12,0-1.3
Alt. C
Alternative Lonzer-Run Tareets _ ___ ____
-7-
(10) Effectuation of Committee policy in the weeks immediately
ahead will be taking place at a time when short-term credit markets will
have to absorb a large Treasury financing--one that will probably raise
about $4 billion of new cash. It is likely that part of the funds will
be raised through tax bills and the remainder through short-term coupon
issues. This is a somewhat larger cash offering than the market is
expecting, and will probably itself exert some upward pressure on interest
rates. If the Federal funds rate is rising at the same time, general
upward rate pressures are likely to be intensified,
(11) In returning to the M1 growth path by September, alternative
B includes a growth rate for M1 over the second quarter of around 5¾ per
cent and during the third quarter of 5 per cent, averaging close to 5¾ per
cent for the six month period. Achievement of such growth rates is expected
by the staff to entail some further increase in interest rates as bank
reserves are held back relative to demand. Demands for money and for
supporting bank reserves over the next several months are expected to be
sustained by the transactions needs associated with growth in nominal GNP
projected at 5.7 and 7.8 per cent for the second and third quarters,
respectively. These growth rates do not include any upward impact from
lifting the embargo, and thus could underestimate money demand to some
extent, particularly by the third quarter. In early spring, there is also
likely to be some increase in private cash balances due to higher than
average income tax refunds. In moving gradually back to the 5¾ per cent
long run path, the staff would expect that reserve provision in the weeks
-8-
ahead would lead to a rise in the Federal funds rate to around 10 per cent
between now and mid-April and would be associated with M1 growth over
the March-April period in a 6 ½-- 8 ½ per cent annual rate range.
(12) If such a rise in the funds rate did develop, it seems
probable that there would be pronounced effects in other areas of the
financial market. The 3-month bill rate would likely move up to around
8½ per cent or somewhat above, and long-term market rates would adjust
further upward. Net inflows of consumer-type time and savings deposits to
commercial banks might slow to around a 10 per cent annual rate, about the
same as in the summer of 1973. Net inflows of deposits at thrift institutions
would be expected to recede to about a 6--7 per cent annual rate, close to
the amount involved in interest crediting. This would be a somewhat better
performance than in the summer of 1973, and appears possible because of the
large amount of interest-sensitive money already drained from these
institutions and because the institutions last summer had not fully
adjusted their advertising and rate policies to the new rate ceilings that
became effective at the beginning of July.
(13) Under alternative C, the expected rise of interest rates
would be much sharper--with the funds rate moving up into the 10¼--11 per
cent area--in order to bring the money supply back to the long run path by
mid-year. If interest rates rose so sharply, though, a strong effect on
money demand would be likely by the third quarter, with money growth in
that quarter projected to fell below a 4 per cent annual rate (unless
reserves were provided at a rate that would permit money market conditions to
ease sharply by around mid-year). A rise in the funds rate to as high as
11 per cent range would also threaten replication of the conditions of last
summer at thrift institutions. The mortgage commitment policies of
those institutions would again be under considerable restraint
and the viability of the current time and savings deposit ceiling
rate structure would probably come into question if high interest rate
levels- with the 3-month bill rate moving over 9 per cent--were sustained
for some time. There could well be significant feedback effects on GNP
of such developments by late summer, though more particularly by the fourth
quarter.
(14) Under alternative A--which encompasses a 6½ per cent growth
rate for M1 over the next six months--the staff would expect that the
Federal funds rate would not rise from current levels and might, over time,
drop back somewhat. If the funds rate remains around 9¼--9½ per cent,
there may be some further upward rate adjustments in markets, particularly
as the forthcoming Treasury financing is absorbed. A somewhat lower funds
rate would moderate and, perhaps to some degree reverse, recent upward
rate pressures. Short-term rates, particularly bill rates, are likely to
be influenced by the strength of business loan demands and by the way in
which the recycling of oil money affects U.S. markets. Assuming business
loan growth is moderate, banks, under this alternative, would probably
not be a source of pressure on markets in view of the continued availability
of demand deposits and strong growth in time and savings deposits other than
large CD's. Under the circumstances, banks would have little interest
in issuing additional CD's or in borrowing from the Euro-dollar market,
unless rates in that market were to drop sharply with the receipt of Arab
oil money in volume.
-10-
(15) In long-term credit markets, corporate and municipal bond
volume is likely to remain large over the next few months, based on the
current schedule of offerings. Foreign borrowing in the U.S. capital market
remains quite modest thus far, although it could pick up as borrowers become
more familiar with opportunities in the U.S. market. Some further upward
yield adjustments in bond markets might develop under current money market
conditions, while yield adjustments are likely to be considerable under
alternative B and very marked under alternative C. Further increases in
bond yields, as well as a rise of short-term interest rates, would also be
reflected in a tightening of mortgage market conditions.
-11-
Proposed directive language
(16) Presented below are three alternative formulations for
the operational paragraph of the directive, which are intended to
correspond to the similarly lettered policy alternatives discussed in the
preceding section. As will be noted, alternatives A and C refer to growth
rates in the aggregates "over the past 3 months." For the 3 months through
February, these are as follows: M1, 5.7 per cent; M2, 9.5 per cent; and the
bank credit proxy, 6.3 per cent.
(17) Alternatives B and C include a reference to the prospective
Treasury financing to be announced early in the week of the FOMC meeting. As
noted in paragraph ([13]), this financing will be in the short-term area, so
that there would ordinarily be little, if any, even-keel constraint. The
reference is added parenthetically to the alternatives which contemplate a
further tightening of money market conditions in view of the highly sensitive
state of financial markets.
Alternative A
To implement this policy, while taking account of inter-
national and domestic financial market developments, the Committee
seeks to achieve bank reserve and money market conditions consistent
with [DEL: moderate] MODERATELY GREATER growth in monetary aggregates over
the months ahead THAN HAS OCCURRED OVER THE PAST 3 MONTHS.
Alternative B
To implement this policy, while taking account of inter-
national end domestic financial market developments (INCLUDING
THE PROSPECTIVE TREASURY FINANCING), the Committee seeks to achieve
bank reserve and money market conditions consistent with moderate
growth in monetary aggregates over the months ahead.
-12-
Alternative C
To implement this policy, while taking account of inter-
national and domestic financial market developments (INCLUDING
THE PROSPECTIVE TREASURY FINANCING), the Committee seeks to achieve
bank reserve and money market conditions consistent with [DEL: moderate]
SOMEWHAT LESS growth in monetary aggregates over the months ahead
THAN HAS OCCURRED OVER THE PAST 3 MONTHS.
CHART 1 STRICTLY CONFIDENTIAL (FR)3/15/74
RESERVES AVAILABLE TO SUPPORTPRIVATE NONBANK DEPOSITS
REVISED SERIES
BILLIONS OF DOLLARS-140 r
6%2% growth for Feb
I I I 1 -1N 0 J F M
1973 1974
ii i ii i I Iii i i iM J S D M J S D
1973 1974
* Break in Series Actual Level of RPD After Changes in Reserve Requirements
f
CHART 2
MONETARY AGGREGATESREVISED SERIES
NARROW MONEY SUPPLY M1 BILLIONS OF DOLLARS
-290
-270
-250
BROADER MONEY SUPPLY M2
-540
19741973
3/12/74)
121'% owth 'u Feb -Mar
\\
N D J F79'3 1974
STRCTLY CONFIOtNTIAL (FR)3/15/74
STRICTLY CONFIDENTIAL (FR)3/15/74
MONETARY AGGREGATES
ADJUSTED CREDIT PROXY
I L I _,I 1 _ i
BILLIONS OF DOLLARS490
470
- 450
-430
- 410
! i _ i .. . -i 1
RESERVES
*"4
1973* Sreak in seres, Actual Level of Total Reserves Afte, Changes in Reserve Requitements
CHART 3
. . . . .. I IIII I II
:974
CHART 4
MONEY MARKET CONDITIONS AND INTEREST RATES
MONEY MARKET CONDITWEEKLY AVERAGES
RESERVESB ORROWED
IONS PER CENT12
- 10
- 8
- 8
4
BILLIONS OF DOLLARS
3
NET BOROWEn. _I1 9__ I _. I _ I I I I I I I I I
1973 1974
INTEREST RATES Short-term PERCENT INTEREST RATES Long-term-1 13 r I
PER CENT-- 1 11
1973 1974 1973 1974
TABLE 1 STRICTLY CONFIDENTIAL
BANK RESERVES MARCH 15 1974
(ACTUAL AND CURRENT PROJECTIONS)
----------------------- r------------------------------------- -------------------
I II aGOREGATE RESERVES I REQUIRED RESERVESI RESERVES AVAILABLE FOR --......---..-.-----............... ..-.........................
I PRIVATE NONBANK DEPOSITS I SEASONALLY ADJUSTEDII------------------------------------------------------ -----------
---------------.--------- II TOTAL NONBORROVED I PRIVATE OTHER CD'S AND BOV*T ANDPFRIOD SEAS ADJ I NON SEAS AOJ II RESERVES RESERVES I DEMANn TIME DEP NON DEP INTERBANK
----- m --m---m - --mm-------- - ----- --------.. mm-mmmmm-m.. .mm---em-m -- m--------------e---------------------------
S (1) I (2) (3) (41 ) (5) (6) (7) (8)II
MONTHLY LEVELS-SMILLIONSI I---------- --------- I (
1973--NOV. I 32,714 I 32,752 11 34*857 33.463 I 19.976 8,430 4,069 2.142DEC. I 32.912 33,167 II 35,105 33,807 I 20,227 8.460 3.918 2,193
I I II1974--JAN. I 3?.799 I 33.867 II 35,850 34.799 I 20.309 89525 3*807 3.051
FERB 32.799 32.883 11 359115 33*923 I 20*039 8.601 39967 2,316MAR. I (333331 (32.904) II 134,988) (33*950) 1 (20*267) ( 8*668) ( 4008) ( le.55)
I I 1 1 1ANNUAL RATES OF CHANGE I II------- I---- --- 1 II
QUARTERLY I II I II
1973--3RD TR. 14.2 1 I 10.6 11.3 1 1.4 15.74TH QTR. 1 1.4 I I 6.1 13.4 I 5. 12.7
I I if I1974--1ST QTR. I ( A.3) ( 2.1) 1 5.3) I ( 0.) ( 9.8)
1 I IIMONTHLYI I I1973--NOV. I -A.3 I II -4.3 -1.6 I -1.1 17.3
DEC. I .4 I II 10.5 14.4 15.1 4.31 I 11 1
1974--JAN. I .9 1 II 35.7 45.9 4.6 9,2FERB. 1 n.0 I -24.6 -30.2 -15,7 10.7MAR. ( 1.2) I ( -4.3) ( 1.0) 13.7) ( 9.3)
1 1I1FEB.-MAR. I ( -6.1) ( -14.4) ( -14.6) ( -1.1) ( 10.1)
I I IIWEEKLY LEVELS-SMILLIONS I------- ----------I I I
I I II1974--JAN. 2 32.921 I 33.562 II 35.312 34.102 1 20.361 89523 3,649 2.391
9 32.747 33.482 11 35.752 34*976 I 20o423 8,506 3,731 3*00516 I 33,075 34,563 II 369521 35.533 1 20396 8.530 3,821 3,44523 I 32.488 33.749 11 35,747 34,565 I 20.211 8*507 39853 3#26030 32,875 33.860 11 35,628 34.408 1 20.212 8,548 3*856 2*753
I I If IFEB. 6 1 32.641 33,165 11 35.199 34.201 I 20.031 8*578 3*906 2E559
13 32.739 32.873 II 35*167 34,014 19.874 8,579 3.992 2.42820 32,795 32*812 11 35.277 33.901 20.107 89613 3.961 2*48227 32.956 38,737 II 34,899 33644 1 20.097 8.626 39992 1,943
1 1 ItMAR. 6 33.108 32.784 11 34.632 33.720 I 20351 8,647 4,017 1.524
13 32.904 32,561 II 34,796 33.812 I 20*100 8*665 4,019 1,8921 1 1 1
----,~-------------------------------- -- - --- - - -- -- - - -- - - - -- - - - -- - - - - -- - - - - " - - - -- - - -
NOTEt DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. AT THE FOMC MEETING OF FEBRUARY 20.1974THE COMMITTFE AGREED ON A RPD RANGE OF 3.5 TO 6.5 PERCENT FOR THE FEB-MAR PERIOD.
-----------------------------------------
TABLE 2 STRICTLY CONFIDENTIAL
MONETARY AGGREGATES MARCH 15, 1974(ACTUAL AND CURRENT PROJECTIONS SEASONALLY ADJUSTED)
-- -------------------------------------------------------------------------------------------------------
I MONEY SUPPLY I ADJUSTED 11 .S. TIME AND SAVINGS DEPOSITS I NONDEPOSITI NARROW I BROAD I CREDIT II BOVT. I I OTHER I I SOURCES OF
PERIOD I (MI) 1 (M2) I PROXY II DEPOSITS I TOTAL I THAN CD S I CD S I FUNDS------------------- -------------------------------------------------------------------------------------------------
I (1) (2) (3) II (4) (5) (6) (7) ( )I II I
MONTHLY LEVELS-SBILLIONSI I I II7;;;:;*......*I I I it II I1973--NOV 268.8 t 566.7 447.5 II 5.8 I 369.9 297.8 I 62.9 7.1
DEC I 270.4 5T707T 4496 11 4.9 I 363.1 1 300.3 1 62.8 7.4I I I i I I I
1974--JAN. 269,6 I 573.7 I 454.3 I1 6.? 369.6 I 304.1 I 65.5 I 7.5FEB. 272.6 580.1 454.6 II 3.0 I 374.1 I 307.5 I 66.6 I 7.7MAR. I (274.9) I (584.9) (456.5) 11 ( 3.7 1 (375.8) 1 (310.0) (65.7) ( 7.9)
I I I I I I IPERCENT ANNUAL GROWTH I I I I I..................-- I I I II
QUARTERLY I I II I I I I I I I I
1973--3RD QTR. I -0.2 I 5,2 10.5 1 ( 14.0 1 10.44TH QTR I 7.5 1 10.1 3.3 II I S.8 I 12.5
I I I I I I I1974--1ST QTR. I ( 6.7) 1 10.0) 1 6.1) II I (14.0) (12.9)
SII IMONTHLY I II I
....... I t II1973--NOV. I 10.4 10.9 I 2.7 11 I 3.3 I 11.0
OFC. I 7.1 8.5 I 5.6 11 I 107 10 1 11I I II I I I I
1974--JAN. I -3.6 1 6.3 12.5 II I 21.5 1 15.2FEB. 13.4 p 13.4 I 0.8 I 14.6 13.4MAR. I (10.1) ( 9.9) ( 5.0) 1 I ( 5. ) ( 9.8)
FEB.-MAR. I (11.R) (11.7) ( 2.9) i (10.1) 1 (11.6)
MEEKLY LEVELS-MILLIONS I------- ----------
1974-JAN. 2 270.3 1 572.6 I 452.5 11 6.0 1 366.5 I 302.2 1 64.3 I 7.09 269.5 1 572.0 I 453.1 II 6.8 I 367.3 I 302.5 1 64.8 1 7.1
16 I 270.0 I 573.7 453.5 II 6.5 I 368.4 I 303.7 64.7 7.323 268.9 I 573.7 454.5 II 6.2 I 370.6 I 304.8 I 65.8 I 7.730 I 268.4 573.7 454.0 II 5.5 I 372.3 305.3 67.1 I 7.8
I I I II I I I IFEB. 6 I 270.9 I 577.3 I 455.5 II 4.5 I 373.2 I 306.4 66.8 7.2
13 271,8 579.1 454.5 If 2.5 I 374.2 1 307.2 67.0 7.820 274.6 I 582.6 453.7 II 1.5 I 374.4 1 308.0 I 66.4 I 7.927 272.2 581.0 I 454.7 I 3.1 375.0 I 308.8 I 66.2 7.7
I I I II I I I IMAR. 6 P 275.9 I 584.7 458.1 II 4.2 I 374.8 I 308.8 66.0 I 8.0
13 PEI 275.2 1 584.6 I 455.9 II 3.1 I 375.5 1 309.4 1 66.1 7.9I I I II I I I I
----- -------------- -------------------------------------------------------------------------------------------------NOTEi DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. P - PRELIMINARY
PE - PARTIALLY ESTIMATED
---- ------------------------------------------------------------------------------------------------------
STRICTLY CONFIDENTIAL (FR)
MARCH 15, 1974
TABLE 3
RESERVE EFFECTS OFOPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS(Millions of dollars, not seasonally adjusted)
Open Market 3perations I/ Daily Average Reserve Effect 2/ A in reserve catioriesBfls Coupon Agency RP's Total Open Market Member Other / req. res. against available res 5 available
. Accept. Iasues Issuefs Net. 3/ O-e-atioa Bank Borrowln. Factors IU.S.n. and interhb .f6--(7f-(8 '1 - .reaervesa,(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
Monthly
1973 -- Aug. -753 -- -20 -143 -915 -81B 93 978 -337 590 680Sept. -494 -- -30 531 7 -583 -282 1,150 -149 434 475
Oct. 1,972 -- 172 295 2,460 1,986 -395 -678 379 534 1,005Nov. -1,008 533 71 -902 -1,307 394 -68 -646 -190 -130 860Dec. 1,862 226 128 -831 1,386 1,336 -101 -759 -70 546 475
1974 -- Jan. -397 179 -10 -100 -328 1,031 -254 698 773 702 895Feb. -32 30 74 -- 71 9 143 -1,505 -356 -997 -875March -36
April
Weekly
1974 -- Jan. 2 659 205 121 5,124 6,110 705 168 -663 303 -939 205 -- -2 -3,819 -3,616 -25 -434 1,099 720 -80
16 -201 -- -- 2,187 1,986 -155 212 1,349 325 1,08123 -159 -- -11 213 44 -459 194 -827 -278 -81430 148 77 19 503 747 803 38 -1,312 -582 111
Feb. 6 -38Z -- -38 -1,864 -2,285 -685 -222 243 31 -69513 394 -- -- 2,788 2,683 269 155 -551 165 -29220 185 30 120 1,049 1,384 888 224 -1,067 96 -5127 -124 -- -8 -3,106 -3,238 -1,001 -122 615 -4
23p -85p
Mar. 6 -759 -- -5 370 -394 -376 -343 436 -330p 47P13 -416 -- -43 2,116 1.657 -21 72 99 373p -223p2027
I^I-^-^~- t--^ I n_-L~i- __LLlt-L-- ^i~_-d ---- J - ^1 't eprsectnLs ciange in Systemi poTrt LLo iroim end-or-perioo; ncluues reaemptions in regular Dill aUCtions.
/ Represents change in daily averae level for preceding period.3/ Includes matched sale-purchase transactions as well as RP's.4/ Sumf of changes in vault cash, currency ih circulation, Treasury operations, F.R. float, gold and foreign accounts, and othe5/ Reserves to support private nonbank deposits. Target change for February and March reflects the target adopted at the Febr
Target change for previous months reflects the bluebook patterns that are consistent with target ranges that were adopted d
r F.R. accounts.uary 20, 1974 FOMC meeting.uring the month.
STRICTLY CONFIDENTIAL (FR)MARCH 15, 1974
TABLE 4
SECURITY DEALER POSITIONS AND BANK POSITIONSMillions of dollars
U.S. Govt. SecurityDealer Positions Dealer Positions _ Member Bank Reserves Positions . .
Corporate Municipal Excess** Borrowing at FRB** .. Basic Reserve Deficit
Period Bills Coupon Issues Bonds Bonds Reserves Total Seasonal 8 Ne York 38 gthers
(1) (2) (3) (4) (5) (6) (7) (8) (9)
1972 -- High 4,291 1,585 235 383 796 1,223 -5,635 -5,720
Low 1,916 -93 0 40 -133 12 -1,638 -1,910
1973 -- High 3,796 1,299 197 384 631 2,561 -5,243 -10,661
Low 897 -301 0 36 -240 688 -1,831 -4,048
1973 -- Feb. 2,132 562 77 123 207 1,594 -4,187 -5,436
Mar 2,490 -50 24 125 177 1,825 -4,273 -5,847
Apr. 2,457 106 12 60 255 1,688 3 -3,293 -6,577
May 1,894 421 66 151 161 1,843 30 -3,019 -5,872
June 2,281 562 33 120 234 1,851 75 -3,507 -6,443
July 1,425 265 24 139 285 1,953 155 -2,460 -6,106
Aug. 1,690 39 0 70 177 2,165 163 -2,689 -4,940
Sept. 2,745 395 6 80 216 1,852 148 -3,173 -5,355
Oct 2,565 484 44 226 227 1,476 126 -3,814 -6,090
Nov. 2,804 793 90 148 239 1,393 84 -4,469 -8,186
Dec. 3,441 973 105 276 307 1,298 41 -4,682 -9,793
1974 -- Jan. 3,102 540 114 254 162 1,051 18 -4,753 -10,893
Feb. *2,436 *1,619 120 263 195p 1,193p 17p -5,262 -10,769
1974 - Jan. 2 2,890 858 43 238 388 1,210 31 -4,418 -9,541
9 3,079 611 141 210 86 776 19 -5,135 -10,615
16 3,117 533 183 134 328 988 20 -6,189 -11,252
23 3,238 553 161 316 -83 1,182 13 -4,870 -11,987
36 3,087 420 42 371 259 1,220 17 -3,229 -10,651
Feb. 6 2,759 898 88 226 124 998 18 -4,118 -10,417
13 2,781 2,203 253 210 294 1,153 15 -5,656 -10,719
20 *2,121 *1,882 95 245 114 1,376 20 -5,726 -10,863
27 *2,096 *1,508 115 299 241p 1,255p 16p -5,341 -10,907
Mar. 6 *2,474 *1,097 114 298 92p 912p 19p -6,003p -10, 4 21p
13 *2,466 * 848 200p 2 80p 120p 984p 19p -5,871p -11,5 4 1p
2027
_ _ _ ___ . . . , . 1 __ . -a
L I -_h --- -
NOTE:
* STRICTLY CONFIDENTIAL** Monthly averages for excess reserves and borrowings are weighted averages of statement week figures.
Government s6curity dealer trading positions are on a commitment basis. Trading positions, which exclude treasury DoLis fnanced oy repu ,aa a -
ments maturing in 16 days or more, are indicators of dealer holdings available for sale over the hear-term. Other security dealer positions are debt
issues still in syndicate, excluding trading positions. The basic reserve deficit is excess reserves less borrowing at Federal Reserve less net
Federal funds purchases. Weekly data are daily averages for statement weeks, except for corporate end municipal issues in syndicate which are Friday
figures.
CONFIDENTIAL (FR)MARCH 15, 1974
TABLE 5
SELECTED INTEREST RATESPer cent
Short-Term ______Long-Term _, _ ___
Treasury Bills 90-119 Day CD's New Issue-NYC Aaa Utilit U.S. Government NMAPerIod Commercial New Recently Municipal (10-yr. Constant Auction
.Federal Funds 90-Day -Year paper 60-89 Day 90-119 Day sue Offered Bond Buyer Maturitv Yield.
(1)
5.383 18
10.845.61
6.587.09
7.177.8948.49
10.4010 5010.78
10.0110.039.95
9.658.97
9.879.769.779.609.47
9.138.939.078.81
8.989.03
10.505.38
6.166.78
7.047.447.98
9.0910.2510.31
9.159.069.44
9.058.09
9.389.139.139.008.63
8.138.138.008.13
8.258.38
(6)
5.503.50
10.755.50
6.286.75
6.757.418.13
9.1910.4010.50
9.088.919.13
8.837.97
9.008.888.888.888.50
8.008.007.888.00
8.138.25
(7)
7.606.99
8.527.29
7.407.49
7.467.517.64
8.018.367.88
7.907.908.00
8.218.12
8.178.278.258.11
8.138.058.108.30
8.378 . 3 3 p
8.307.26
7.417.51
7.487.507.64
7.978.227.99
7.947.948.04
8.228.23
8.148.258.218.268.20
8.198.258.248.29
8.278.36p
Weekly data for columns 1 to 4 are statement week averages of daily data. Columns 5 and 6 are one-day W
weekly date is the mid-point of the calendar week over which data are averaged. Column 9 is a one-day
stateent week. Column 11 gives FNMA auction data for the Monday preceding the end of the statement wee
yivod in the bi-weekly auction for short-term forward comitments for Government underwritten mortgages
5.594.99
5.135.29
5.155.155.18
5.405.485.10
5.055.185.12
5.225.20
5.185.225.245.265.20
5.165.185.215.26
5.275.32
(10)
6.585.87
7.546.42
6.646.71
6.676 856.90
7.137.407.09
6.796.736.74
6.996.96
6.946.986.997.017.01
6.946.936.967.01
7.087.10p
(11)
7.727.54
9.377.69
7.727.78
7.897.988.07
8.468.839.32
9.018.848.78
8.718.48
8.71
8.53
8.43
8.44
ednesday quotes. For Columns 7, 8 and 10 the
quote for Thursday following the end of the
k. The FNMA auction yield is the average
1972 -- HighLow
1973 -- HighLow
1973 -- FebMar.
Apr.MayJune
JulyAug.Sept.
OctNov.Dec.
1974 -- Jan.Feb.
1974 -- Jan.
Feb. 6132027
Mar. 6132027
10.505.63
6.176.76
7.137.268.00
9.2610.2610.31
9.149.119.28
8.868.00
9,168.988.888.988.65
8.258.037.887.88
8.158.33
Notes:
-I~Y~aY-- YIL LL - -- -9- -_1_I . _.~ i. i ~ -L .-.. I* I - - . ( - -c . - LrL~LI.
Appendix Table IRESERVES AND MONETARY VARIABLES March 15, 1974
Resrves MCey Shock M;aures Bank Credit Measures Other
Available tn Adj,,ted Total Time Thrift U.S.S)pport Pvt M M M Credit Loans and Total Other than Institution Nondeposit Gov't
Period Total Nonborrowed eposlts 1 2 3 Proxy Investments Time CD's Deposits CD's m13)s (14)l
(1) (2) (3) ()(5) 6) (7) (8) (9) (10) (11) (12) (13) (1
(Per Cent Annual Rates of Growth)
+8.2+9 4
+11 6+10 6
+11.2+11.3
+13.8+ 7.0
+10.5+11.6+10 2+17.1
+14. 6+12.6+10.5
+3.3
49.7+11.1+22.3+15.4+11.0+11.1
+8.6+17.0
+5.7+1.6+2.7+5.6
+12.5+0.8
+8.1+11.2+14.6+12.6
+14.7
+16.6+ 8.0
+15.7+11.1+13.0+15.8
+19,9412.7+11.4
+17.8+23.7+17.2+13.1+16.6
+8.2+13.3+16.7
+4.1+6.7+5.0+1.5
+15.8+15.0
+17.9+18.2+15.7+15.9
+15.4+14.8
+20.7+10.0
+14.5+15.7+14.3+14.8
+22.7+17.8+14.0+ 5.8
+16.5+22.3+28.2+22.5+18.9+11.2412.5+19.2+ 9.8+ 3.4+ 3.31-10.7+21.5+14.6
+7.1+17.5+16.9+ 8.6
+17.3+15.4
+11.7+ 5.3
+18.9+14.7+16.2+13.9
+13.649.4+3.147.5
+15.8+14.6+10.2
+9.4+7.8
+10.8+6.5
+2.7+6.4+7.2+8.6+8.2+7.4
(Dollar Change in Billions)
+14.4 -8.4+ 7.7 -7.6+10.4 +0.4+19.4 +3.0
+ 4.4 -0.2+ 6.0 +0.6
+18.6 +1.2+ 0.8 +1.8
+ 0.7 -0.3+ 3.7 +0.1+ 2.4 +0.3+ 3.6 +0.3
+11.2 +0.5+ 7.4 +0.7+ 4.7 +1.7- 3.9 40.1
+ 1.3 +0.6+ 4.4 -0.5+ 5.5 +0.4 1+ 3.8 +0.2+ 2.9 +6.3+ 0.7 +0.2+ 1.9 +0.9+ 2.4 +0.6+ 0.4 +0.2- 2.9 -0.4- 1.8 40.2+ 0.8 +0.3
+ 2,7 40.1
+ 1.1 +0.2
Annually:
1970197119721973Sefi-tAlnallYIst Hlf 19722nd Half 1972
1lt Half 19732nd Half 1973Quarterly
let Qtr. 19722nd Qtr. 19723rd Qtr, 19724th Qtr. 1972
1it Qtr. 19732nd Qtr 19733rd Qtr. 19734th Qtr 1973
Mnnthly.
1973--Jin.FebMar.AprPayJuneTulyAug.Sept.Oct.NovDec.
1974-Tan.Feb. p
16.0+7.2
+10.6+ 7.8
+10.8+ 9.9
+ 6.7+ 8.6
+ 8.7+12.6+4 4415.1
+ 6.4+ 6.9410.6
+6.1
+30.1-21.1+10.5+14.7
+5.4+0.5
+27.2-5.1+9.4
+12.1-4.1
+10.5+35.7-24.6
+9.3+7.8+7.7+7.2
+11.0+ 4.1
+ 1.6
+12.7
+ 9.1+12 6- 0.9+ 9.2
- 3.6+ 7.0+11.3+13.6
+26.8-38.5+1.8
+20.1+0.5+0.2+24.9-13.5+21.9+26.7-1.6
+14.4+45.9-30.2
+8.7+6.9+10.1+9.3
+8.3+11.5
+10.3+ 7.8
+ 9.6+ 6.9+10.4+12.2
+ 7.8+12.5+14.241.4
+15.9-2.9
410.3+10.0
+9.9+17.3+18.5+10.1+13.3+1.0-6.3+9.446.9
__D- _____1----1-- -- ---- - -I---- ----- --- _----------- -^ ------ - ---------- *---*--l-- ----- 1rapliminirv
WOTY Reserve Requlremeht on rarodollr borrowings are included beginning Ottober 16, 1969, and requireients on bank-related commerrial paper ate included beginningOctober 1, 1970.
i/ Growth rates are ansed on etfjrltea monthly average levels derived by averaging end of current month and end of previows month reported data.
March 15, 1974
Appendix Table IIRESERVES A) MONETARY VARIABLES
(Seasonally adjusted, billions of dollars)
MONEY STOCK MEASURES BANK CREDIT MEASURES--- 6 - ----r------- -, .-
Total Pv. lpenM~
RFSRVFS
Nonborrowed
(2)
28,86131.13730,360
11,03730, 04030,085
30,58930,60230,608
31,62231,76132,321
33,46633,46333,807
34,79933,923
Avnilahle toSupport Pvt.DtP, ltq___
(3)
27,09923,96529,053
29,43929,36829,621
29,86730,11430,548
31,35832,03832,396
32,84532,71432,912
32,79932,799
AdjustedCreditProxy
475 2 641.2 332.9473.0 726.9 364.3525.5 822.4 406.4
rnt 11(117
29,193
31.290
32,19931,63411,910
32,30032,464532,459
33,57631,90634,173
34,94234,85735,105
35,85035,115
409.7413.5421.2
426.6430.5434.5
437.6443.8445.9
446.5447.5449.6
454.3454 6
Weekly1973--0er. 5 35,108
17 34,62319 35,21126 35,330
1974-- an. 2 35,3129 35,752
16 36,52123 15,74730 35,628
Feb. 6 35,19913 35,167
20 35,27727p 34,899
Mar. 6p 34,632
33,63333,32133,72234,292
34,10234,97635,53334,56534,408
34,20134,014
33,90133,644
33,720
33,04132,56132,86933,209
32,92132,74733,07532,48832,875
32,64132,73932,79532,956
33,108
269.1270.7270.9271.0
270.3269.5270.0268.9268.4
270.9
271.8274.6272.2
275.9
- 6 ..--------
208.1209.2209.4208.9
208.8207,8207.8208.2206,9206.5
208.5209.3211.9209.7
212.8
568.2569.7571.8571.6
57.6572.0573.7573.7573.7
577.3579.1582.6581.0
584.7
447.6447.9449 3452.5
452.5453.1453.5454.5454.0
455.5454.5453.7454.7
458.1
360.8361.9363.1363.7
366.5367.3368.4370.6372.3
373.2374.2374.4375.0
374.8
299.1298.9300.9300.7
302.2302.5303.7304.8305.3
306.4307.2308.0308.8
308.8
p - PreliminaryNOTF Reserve requirements on Eurodollar borrowings are included beginning October 16, 1969, and requirements on bank-related comercial paper are included beginning
October 1, 1970. Adjusted credit proxy includes mainly total member bank depoit- subfect to reserve requirements, bank-related commercial paper and Eurodollarborrowings of U.S. banks. Weekly data Are daily averages for statement weeks. Monthly data are daily averages except for nonbank coimercial paper figures whichAre for last day of month. Weekly data are not available for M,, total loans and fnvestments and thrift institution deposits.
1/ FPtimated monthly average levels derived by averaging end of cuerpnt month and end of previous month reported data.
OTHER
221 2235.2755.7
256.7257.9258.1
259.4262 4265.5
266.4266.2265.4
266.5268.8270.4
269.6272.6
ANNUALI\
fr 1 70ncr 1171nre 1077
MONTII
1973- lanrebNMr
AprMhy
hlv
Sept.
Oct .Nov.Dec.
1974-- -aFeb.
529.6532.3534.6
538.3543.6569.4
552.0554 9556.6
561.6566.7570.7
573.7580.1
172.2182.6198.7
199.6200 4200.1
200.8203.4206.2
207.0206.4205.2
206.1207.92B.8
207,8207.8210.0
Non-
DepositsFunds
TotalLoans &Investments
438.5487.6559.0
567.3578.5586.8
593.2601.4605.5
612.2620.7622.8
626.3628.9629.7
638.0646.0
TimeOther than
CD's
203.9237.9269.9
272.8274.4276.6
278.9281.3283.8
285.6288.7291.2
295.1297.8300.3
304.1307.5
ThriftInstitution
Denosits--
216.1253.9296.9
300.8304.4307.0
309.4311.4314.2
315.9315.9316.6
318.3320.2322.5
324.7326.7
229.2270.9313.3
317.6323.5331.1
337.3342.6345.8
349.4355.0357.9
358.9359.9363.1
369.6374.1
CD's
(13)
25.333.043.4
44.749.154.6
58.461.362.0
63.966.366.7
63.862.062.8
65.566.6
U.S.Gov'tDemand
(15)
6.56.16.1
6.76.17.6
7.15.25.3
3.94.85.0
6.05.84,9
6.23.0
'
Appendix Table III
Growth(Per cent
M
M 0
9.0 5.3
6.2 8.2
8.7 8.2
9.9 8.4
3.8
11.5
-0.2
7.5
7.0
7.5
5.5
3.9
"Rate in Money Supplychange at an annual rate)
M2 M
M Q M Q
12.3 11.0 14.6 13.2
8.9 9.8 10.9 12.0
10.8 10.8 12.8 12.6
10.6 10.2 11.8 11.8
6.9
11.1
5.2
10.1
8.a
8.7
7.9
8.5
9.4
10.4
4.5
9.2
10.7
9.1
7.2
7.3
M = Annual rates of growth calculated from average levels in the finalmonths of the quarters.
Q = Annual rates calculated from average levels in all three months ofthe quarters.
1972 I
II
III
IV
1973 I
II
III
IV
